Should I stay or should I go?

go procurement decisions

Management consultant Naomi Clews discusses the go/no-go procurement decision making process and how it relates to a decision to proceed or not to proceed with a recommended course of action.  

How is the go/no-go decision making process used in purchasing decisions? Read on to find out. ​

What is the go/no-go procurement technique?
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The go/no-go procurement technique is a decision making process where the authoriser reviews a recommendation and will either authorise a go (e.g. to start) or authorise a no/go (e.g. stop or further information required) decision based on the information they are presented with. 

How does the go/no-go procurement decision work in theory? 
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The expression "low hanging fruit" describes something that is considered easy or easier to achieve than other options.

​Using this analogy, you could pick the low hanging fruit without the use of a ladder. But you notice that the best fruit is hanging at the top of the tree. 

You weigh up the pros of picking more fruit (more profits) with the cons:

1. cost of sourcing a ladder, and
2. risk of harm to yourself, and the fruit, if you fell off the ladder. 

To aid your decision making, it may be useful to determine the probability of you falling off the ladder, and how you would source a ladder.

This may include consideration of: 

1. the quality of the ladder,
2. your previous experience of climbing ladders,
3. the ground conditions underneath your feet, 
4. the expected weather conditions, and 
5. availability of ladders. 

​You may conclude that if you could find somebody to hold the ladder (whilst you picked the fruit) this would lower your risk of falling off the ladder.

But this may also eat into your profits, if the person expected compensation for their time, holding the ladder. And, you may be alerting others to the unique opportunity you have found and create additional competition for yourself. 

You may consider: 

• How much will I make from selling the fruit?
• How much will the ladder cost? 
• How much will a person's time cost? 

​If the risk of falling off the ladder is high and/or sourcing the ladder and additional resource would cost more than the fruit is worth, it may be wise to make a no/go decision.

If on the other hand you could borrow a ladder from a kind person who would also hold the ladder for you for free, you could obtain all the fruit and keep all the profit.

​It would therefore be wise to make a go decision. 

How does the go/no-go procurement decision work in practice? 
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It is January and your manager has asked you to review what the organisation is spending money on with the goal of making savings before the end of December.   

Your job performance is measured and assessed on your ability to achieve a defined level of savings for the organisation (within a 12 month period) and to achieve a minimum customer satisfaction rating. 

​​In the above scenario, there is a requirement to hit a target within a defined time period whilst ensuring your customer is happy with the outcome. 

This may lead you to ask some, or all of the following questions when making your go/no-go decisions:
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1. What in year savings opportunities are there?
2. Are there any costs associated with making the change?
3. How easy/difficult will the change be?
4. Will pursuing this activity put pressure on my existing workload? 

We will now look at each of the above questions in turn. 

What in year savings opportunities are there?
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By performing the necessary analysis you can determine the level of savings available for each identified opportunity.

Are there any costs associated with making the change?​
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If your saving opportunity includes switching suppliers it is important to check the contract for any early termination charges. 

How easy/difficult will the change be? 
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Are there any other costs associated with making a change that you need to factor into your decision making process. 

Will pursuing this activity put pressure on my existing workload? 
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Whilst analysing each saving opportunity it is prudent to also determine the amount of your time and your effort required to realise the savings.

Is there an easier way to realise the same level of savings? 

In Summary
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The go/no-go decision making process is a decision making technique, rather than an exact science. There will always be an element of risk, even if you decide to do nothing. 

The go/no-go decision making process is a useful technique for the purchasing professional.

​When used correctly it can save you time and effort by not pursuing projects that have a higher probability of failure. 

About the author 
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Naomi Clews

Naomi Clews, management consultant and owner of boutique procurement advisory firm Naomi Clews Consultancy Limited is a CIPS qualified purchasing and supply chain management professional with 30 years hands on experience, knowledge and skill. Find out more here.